In general, the construction recovery is continuing from the lows of the 2008 recession.
Construction employment is up in the majority of the business regions. The construction industry represents over one-third of PSG’s business activity and our involvement varies region by region.
For example, the major metropolitan areas see robust activity for both Commercial and Residential construction. The commercial activity involves mainly infrastructure work and the residential activity is more apartment construction compared with the single family tract housing projects prior to 2006. The recent mortgage crisis and drop in housing values have driven more families in to the rental market. Multi - family construction is very strong.
PSG’s construction book involves the more difficult to place lines. The market is very competitive for interior trades such as electrical, plumber and HVAC work. Specialized contractors involved in roofing work and exterior work where water seepage damage is possible find coverage available through PSG in the specialty market.
Contractors working on new ground up construction for apartments and condos generally are placing coverage on a General Liability only Wrap up basis where all contractors are covered in a single policy for the length of the project, including the Completed Operations requirement. Certain states, including California, Colorado and South Carolina are more challenging due to Construction Defect and specific statutory large issues. Other states such as Texas and Florida are challenging due to legal climate and coastal, weather related issues.
The New York City marketplace is uniquely challenging and PSG has the expertise and the markets to respond. The New York City skyline is full of cranes which was not the case during the recent recession. Condo construction is active with many foreign investors driving up pricing. In addition, apartment construction in all five boroughs of New York City is also active.
The New York liability statute is very challenging for contractors. It imposes strict liability on owners and General contractors when workers are injured in falls from heights. Contractual risk transfer aims to transfer liability to the responsible party, however, often those subcontractors do not have complete or adequate coverage and the claim reverts back to the General Contractor and Developer/Owner.
Another growing aspect of in the construction arena are contractors supporting the booming Energy exploration taking place across the United States. Over 77000 wells have been drilled since 2008 and that industry requires various specialties to prepare the site and complete the well after drilling. The specialty marketplace has responded with the coverages that meet the unique specifications of the Hydraulic Fracking industry.
This is another example of the Excess and Surplus lines industry responding to emerging exposures where the standard marketplace does not.
Maureen Caviston is President of Partners Specialty Group, a nationwide, independent, wholesale broker with a history of providing innovative insurance solutions for the most challenging risks. PSG brokers have extensive experience and enduring underwriter relationships which enable us to be nimble and responsive. PSG’s areas of specialty include Construction, Real Estate, Manufacturing, Financial Services, Healthcare, Hospitality, Transportation and Environmental.